U.S. retail sales rise in July, easing fears of an economic slowdown


(MENAFN) U.S. retail sales saw a stronger-than-expected increase in July, providing some relief to financial markets concerned about a potential sharp economic downturn due to rising unemployment rates. According to the Commerce Department's statistics bureau, retail sales grew by 1 percent last month, a notable improvement from the previously revised 0.2 percent gain in June. This robust growth exceeded economists' forecasts, who had anticipated a modest 0.3 percent increase based on earlier projections of flat sales. The data indicates that consumer demand remains resilient, despite concerns about an economic slowdown.

The unexpected rise in retail sales could influence financial markets to reconsider their expectations regarding monetary policy adjustments by the Federal Reserve. Originally, markets had been anticipating a 50 basis point interest rate cut next month in response to mounting economic pressures. However, the stronger sales figures suggest that economic conditions might not be as dire as previously feared, potentially leading to a smaller, 25 basis point rate cut instead. This shift in expectations comes as inflation showed moderate increases in July, further complicating the Fed's decision-making process.

Overall, the July retail sales data underscores the strength of consumer spending and offers a counterpoint to fears of a severe economic slowdown. The resilience in retail sales may prompt a reassessment of economic forecasts and monetary policy, reflecting the ongoing balancing act between supporting growth and managing inflation. 

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